Public and private cooperation
Today the cost for the industry of emitting CO2 is lower than the cost of capture and store CO2. In addition, other barriers for investments in CCS exists which means that both subsidies and cooperation between government and industry are necessary to realise a demonstration project as ambitious as Longship.
Part of any experience is of course trying, failing, learning from those mistakes and trying again until you succeed. Norway’s experience of planning CCS projects led to a new framework for full-scale CCS in Norway. Gassnova’s pre-feasibility report “Study report on potential full-scale CCS projects in Norway” (in norwegian only) from May 2015, identified several emission sources and storage sites that may be technically feasible for CCS and industrial players which may be potential partners.
Most importantly, the study identified key investments barriers for the industry, risks to the project and a proposed way forward. This study led to what later became known as Longship.
Dividing the chain in Norway
A lesson learned from attempts to establish European CCS projects as a climate change measure is that it can be challenging for industry players in a CCS chain to take on risk for elements of the CCS chain over which they have no control. For Longship, it was therefore decided to establish separate agreements between government and industry for the different parts of the CCS chain.
“As a result, industrial partners will not bear risk related to other parts of the CCS chain other than their own area of responsibility.”
Longship consists of two capture actors, Heidelberg Materials in Brevik and Hafslund Oslo Celsio (earlier Fortum Oslo Varme), and one transport and storage actor, the Northern Lights JV consortium (made up of Equinor, Shell and TotalEnergies). Each of the three actors has separate agreements with the government to avoid cross-chain risk.
Gassnova has been responsibile for coordinating the industrial participants across the links in the chain. This includes ensuring the overall design of the chain, interface management and schedule management.
Sharing cost and risk
The Norwegian state has agreed to provide the industry partners with subsidies for capturing, transporting and storing CO2. And Heidelberg Materials, Hafslund Oslo Celsio, Northern Lights JV each have their own agreement with the Norwegian state.
Both CAPEX and OPEX for 1o years are subsidised. According to European Surveillance Authority up to 100 percent of the costs can be subsidized. However, there is a cost and risk sharing between industry and government. Through the grant agreements, the State has also reduced the risk. The State’s sharing of costs and risks in Longship must be seen in the context of Langskip being a demonstration project, which is likely to have significantly higher costs and risks than subsequent projects.
“Each company will develop their project according to their own procedures and methods and each company will own and operate their facilities.”
Gassnova’s role
Overall responsibility for Longship will reside with a steering group, made up of members from the Norwegian Ministry of Energy and Gassnova.
Gassnova’s role has been to lead overall planning of Longship, while managing the study contracts with the industry partners. The state enterprice has also followed up the work with interfaces between the industry partners. When the FEED studies were completed, Gassnova evaluated the industrial projects and provided a recommendation to the Government.
Finally, Gassnova has a responsibility for disseminating the outcomes of Longship in order to ensure that the overall project goals are met. This is referred to as “benefits realisation”. All parties involved in the project contribute to this work. Sharing Longship’s knowledge is an important part of this work.